Kroger (KR 1.80%) released impressive fourth-quarter results on Thursday morning. Not only did its adjusted earnings per share come in higher than expected, but the company said it expects more same-store sales growth in 2023. The results were notable, particularly when viewed next to the stock's conservative valuation, evidenced by its price-to-earnings ratio of 14 and its meaningful dividend yield of 2.4%.

Here's a closer look at some of the most important takeaways from the grocer's quarterly update.

1. Adjusted same-store sales rose 6.2%

This increase in fourth-quarter same-store sales, which adjusts to exclude fuel sales, was lower than the 6.9% same-store sales growth the company posted in Q3 but higher than the 5.8% growth it saw in Q2. This increase in same-store sales played a significant role in the company's 5.5% increase in total sales for the quarter.

2. Digital sales growth accelerated

Importantly, the company's digital strategy is paying off. Digital sales increased 12% year over year during the quarter. This is an acceleration from 10% growth in Q3 and 8% growth in Q2.

Another way to measure the company's progress with its e-commerce investments is its growth in digitally engaged households. These households increased by 900,000 over the last 12 months.

3. Kroger paused its share repurchase program

As the company courts Albertsons (ACI -0.54%) in a proposed merger with the company, Kroger has paused its share repurchase program in order to prioritize deleveraging its business. While the company's net total debt-to-adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio is currently 1.57 (down from 1.63 a year ago), Albertson's balance sheet carries more net debt relative to the company's EBITDA. 

4. Kroger will continue paying a dividend

Importantly, Kroger doesn't expect to have to cut its dividend in order to fortify its balance sheet for its pending acquisition of Albertsons. Management not only said in its fourth-quarter earnings release it will continue paying quarterly dividends, but that it expects the payments "to increase over time, subject to board approval."

Kroger's dividend has grown rapidly in recent years. The company's most recent dividend increase was announced last summer, when management boosted the quarterly payout by 24%. This was the company's 16th consecutive annual dividend increase. 

Currently paying out less than a third of its net income in dividends, Kroger looks well-positioned to simultaneously pay off substantial amounts of debt while continuing to pay its dividend -- and probably announce another dividend increase this summer.

5. A robust outlook

For the full year of 2023, Kroger said it expected its same-store sales to increase 1% to 2% year over year. But after adjusting for the termination of its agreement with pharmacy company Express Scripts as of the end of 2022, Kroger's expectations for underlying same-store sales growth is 2.5% to 3.5% during the year. This is impressive guidance during a period of macroeconomic uncertainty, inflation, and rising interest rates.

Overall, Kroger's results show a company executing well in a difficult environment.